Finance Minister: Georgia’s macroeconomic parameters “on par with or exceed” those of EU member, candidate countries

Georgian Finance Minister Lasha Khutsishvili on Wednesday told the country’s Parliament its recent macroeconomic parameters “are on par with or exceed” those of European Union member and candidate countries. 

Speaking in the Minister's Hour format to answer questions by MPs, Khutsishvili said the country has achieved a “high rate” of economic growth, low inflation rate, low Government debt and budget deficit, and ensured a “speedy” recovery of macroeconomic and fiscal parameters after the Covid-19 pandemic. 

The Minister added the pandemic-induced lag had been “completely eliminated” in terms of economic growth, and the economy had returned to its pre-Covid trends.

He said the International Monetary Fund had forecast that Georgia's gross domestic product per capita, adjusted for purchasing power, would reach up to 45 percent of the EU's median indicator by 2024. 

Khutsishvili told the MPs Georgia had also received the “best result” among the 59 countries evaluated by the Public Expenditure and Financial Accountability methodology.

We have the highest scores in 20 out of 31 indicators in the recent assessment. It is important that the strategy is focused on improving the management of public finances not only at the central but also at the municipal level”, the Minister said, adding a “new direction” of the state strategy was to start evaluating the effectiveness of budget programmes.

Photo: Ministry of Finance

He said Georgia, as a candidate for EU membership, had joined the methodology developed by the European Commission for candidate countries for the first time to prepare the medium-term programme of economic reforms and submitted the Programme of Economic Reforms for 2024-2026 within the set deadline. 

This document serves as a medium-term expenditure planning tool for candidate countries”, the Minister explained.

He said changes had been made in tax and customs legislation based on the Association Agreement signed between Georgia and the EU in 2014, which had created an “important prerequisite” for making it easier for domestic businesses to operate in the bloc and other countries.

Khutsishvili said work was ongoing to conclude double taxation avoidance deals and to renew existing agreements. 

Presently, the agreement is in effect with 58 countries. In 2023, the agreement with Poland and Kyrgyzstan came into force. Negotiations have been conducted with Montenegro and Malaysia to finalise an agreement”, he said.

The official highlighted “achievements” of 2023, including the launch of a new payment debt management system to prevent payment evasion, and introduction of a new computerised transit system to allow international shipping companies to use a single electronic transit declaration in domestic customs without “any additional formalities”. 

This means goods can be shipped without any interruptions in both the EU and the countries of the Common Transit Convention”, Khutsishvili said.

The official told the MPs the Authorised Economic Operator programme had been launched to enhance the efficiency of customs processes, and that automation and digitisation of customs procedures continued in the country through the utilisation of artificial intelligence and “other advanced technologies”. 

Khutsishvili mentioned the launch of the Economic Zone of Electronic Clearance - eGez - to promote electronic customs services and improve remote services, and noted efforts were being made to reform property tax with the aim of adopting “international best practices”.

The Minister pointed out domestic customs had rejected goods on state borders in 1,795 cases since the beginning of the hostilities in Ukraine by the Russian Federation. 

Additionally, over 1,050 customs decisions were made to refuse applications for export or re-export of goods to the Clearance Economic Zones [...] There were no violations of the imposed sanctions during this period thanks to the effective work of the customs department”, Khutsishvili said.

He also told lawmakers preparations were underway for hosting the 57th Annual Meeting of the Asian Development Bank in Georgia in May, noting it would be the “largest gathering of its kind” in the country, expected to attract up to 4,000 delegates from 68 countries.